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Giordano Dichter takes a look at the vital role of the incubation industry in ensuring the entrepreneurial needs of today's youth are met and served

There is a lot of talk about young entrepreneurs these days. We all hope that the next generation will be the one who will stand up, take the risks, create wealth and turn around our tired economies. Looking at the amount of money that the public sector is pouring into programmes to seed entrepreneurship, and at the number of those aimed at supporting the younger generation in starting their own business, one might imagine that our problems will be over soon. Of course, only time can tell if this is actually wisely invested money. And, given the outrageous unemployment rates that are currently afflicting European economies, (which assume tragic proportions when looking at the younger population), there is not much of a choice left. The youth definitely seem to be the horse that can be backed, and it is the reason why policies in support of young entrepreneurship are hot on almost anyone’s political agenda today. Whether younger people are more likely to become entrepreneurs than more mature ones is a matter of discussion, of course, but one thing that the younger generation cannot allow themselves to lose is hope in the future, and if this hope can be translated into entrepreneurial action then it would appear that things are on the right track.

The Theory

Defining a priority and a policy to regulate it at both national and regional levels, should translate into programmes and actions for which business support organizations play a relevant role, one that indeed has the potential to grow. Young entrepreneurs are not so different from any other kind of entrepreneur. Being 'young' may bring additional factors which need to be dealt with, but in the end the big picture of the service value chain will not differ much from the ones that are currently being deployed by organizations such as the EU|BICs and incubators. Age is not the most 'crucial' factor when assessing a technology or an innovation whose main features will not change according to the characteristics of the innovator. An innovative pizza recipe will produce the same flavour whether created by a pimplyfaced teen or his grandfather. Where the ‘age factor’ really does makes a difference is within the capabilities sphere. It is not a novel fact that being innovative requires a certain mind-set, which not everybody is blessed with; however it is one which could be acquired over time, with experience. The knowledge of a specific context, a market, an industry, a specific production process or a sales mechanism... can lead operators to think of improved ways of operating that are conducive to increased efficiency, through the introduction of incremental innovation. Being experienced, and therefore not too young, seems to be an advantage in this case. On the flip side, those with less experience are more likely to be capable of thinking out of the box. Fresher minds may indeed lead to those radical innovations, which may have very well made Silicon Valley the success that it is, leading to the idea that there are advantages in putting at work a brain which is not too experience-affected. Indeed, the opportunities that the democratisation of the internet is enabling, are more often instinctively understood by younger people. Not having ‘experience’ means young entrepreneurs are open to ideas – especially in the digital arena – that their older colleagues may consider ‘impossible’, ‘unviable’ or ‘just plain silly’.

The 'age factor' comes with other complications as well. One, above all, is the lack of business experience. As we all know it is not only a new technology that provides for a great business. This needs to be coupled with sound business acumen, the ability to exert leadership and to have that practical know-how of ‘how things work’, how to compromise and successfully manage talents. These qualities are rare and generally gained with experience. There are no real shortcuts, although some exceptions do exist A young entrepreneur said, the most valuable suggestion he could provide to other would-be young entrepreneurs was, "whether you really need them or not, whenever you are out doing business, wear eye-glasses'. These have the power to make a person look older, and therefore more credible.

The Practice

It comes to no surprise that incubators, EU|BICs and business support organizations in general have been spending much resources to target young entrepreneurs and to seed the idea within young minds that an entrepreneurial lifestyle is not only exciting, but also to some extent, feasible. Therefore, the big picture may change. How? Raffaele Ricciuti, General Director of Sviluppo Basilicata, an EU|BIC operating in southern Italy says, “The real innovation is in how enterprises are created and how to develop future seeds acting as loudspeakers of younger groups, sustaining their aspirations and their innovative ideas. To do this we need to be capable of listening.” One could not agree more. “New support models,” says Raffaele Ricciuti, “need to base their roots at ground level. For instance, new coaches and tutors could be found among the existing enterprises, those who are and have been through an incubation process. In this way real experience can be transferred, models can be passed on and mistakes can be avoided. It is necessary for some incubators to pass from 'project' mode to 'people' mode”. Of course, staff members of incubators will need to take into account the age factor when tailoring the mix of ingredients that will create the perfect support service.

The incubation service value chain is affected in various ways and this will in turn affect its deal-flow. If we look at it closely some elements of the young-entrepreneurs support measures need to be carried out from the very beginning. Let’s take a look at the initial stage, where inspiration acquires a whole new meaning. Ali Mnif, senior project manager at Wiki Start Up accelerator in Tunis, says that the right sort of inspiration is crucial. “The inspiration we are looking for is not only the kind that pushes a jobless young person to establish his/her own company, but also motivates the highly-talented Tunisian diaspora to start ventures in their home country,” he says. “With proper inspiration we could define the pyramid of risks, that would push any young talented person in the country to believe in his/her ability to start a business and, more importantly, to succeed and to take it to the next level. We need to pursue not only Tunisians in the potential of his/her country, but would attract young people from abroad to start their business in Tunisia.”

Lead Generation and Pre-incubation

The EU|BIC observatory shows how, in Europe, on average ten percent of the initial enquiries for enterprise creation actually make it through to the start-up phase. Although no youth-related statistics exists, it would be an educated guess to say that where youth is concerned these percentages would be much lower. The can only be one answer: get the youth out there. To sustain young entrepreneurs you need to inspire them first, and to accomplish this task, you need to go where the young congregate. To reach them an incubator will need strong partnerships and will need to have its value propositions set up right. For example, if you are aiming at young graduates, work will need to be done within the universities where you can get to pitch the idea of an alternative and 'cooler' life style, where the young entrepreneur can picture himself or herself having the privilege of working on independent terms. But before this can happen the university itself will need to open its doors, and require convincing that gaining recognition as an entrepreneurial university might actually positively affect the prestige of the university itself. Alvaro Simon de Blas, Director of the BIC Euronova in the Spanish city of Malaga, finds that collaborating with the local Association of Young Entrepreneurs has been a necessary step for accessing young potential entrepreneurs. “We organize various activities with the Association. First of all we organize an annual competition for young start-ups. This provides quite a lot of visibility in the province. Furthermore, we have devised a system through which we network with the young entrepreneurs belonging to the association with the tenants of BIC Euronova to foster business relations. The tenants act as real coaches for these entrepreneurs, and we find this to be a priceless asset.”

Luca Capra, Director of Technological Promotion of the EU|BIC Trentino Sviluppo, based in northern Italy, points out that one of the most important actions that the EU|BIC does to support young entrepreneurs is actually happening outside the incubator’s walls. He explains, “The BIC has recognized that the promotion of entrepreneurship needs to be done directly on the spot. You cannot wait for young potential entrepreneurs to come to you, you must go to them. Approximately once a month Trentino Sviluppo organizes, together with the local municipalities, specific events to inform and stimulate young people to enter the world of entrepreneurship. There is a good attendance at these events, although we do not specifically target technologically innovative entrepreneurs. Further support is then provided to those who want to follow-up in terms of business planning support and access to funding, where we are able to provide some seed money to ease their start-up pains.” The soundness of the pre-incubation needs to be inversely proportional to the experience. If direct business experience is really lacking, then it should be an incubator’s duty to deploy the best pre-incubation services possible. This will ensure the right elements are in place in order to make the most suitable decisions and to answer the question, is it really worth investing your young talent, resources and time in this venture?

Training of Thought

Training is the best help that can be given here, but training alone is not enough. Training can help a young inexperienced would-be entrepreneur to acquire part of the technical background he needs. It can either scare him enough to want to let the whole thing go, or it can intrigue him enough to find the proper motivation. However, in the end training per-se will not make an entrepreneur. But, it might discover one. Although wearing eyeglasses can disguise some inexperience (apparently a nicely trimmed moustache has the same effect, though women might disagree), these tricks will not fool investors, who look not only at the potential of the business idea, but also at the capacity of the team to manage the company. It is likely that the early-stage funding phase is the first real viability test, and this is definitely harder for younger people with no business pedigree to display. Incubators can make a strong difference here, as going through a pre-incubation phase coached by experienced people will certainly prepare you better than winging it solo. Incubators staff, of course, use tools and techniques to understand whether someone has it the innate potential to be an entrepreneur. Some use skill-assessment tools, others perform attitude-tests, but when it comes to the bare facts, good incubator practitioners have developed a gut feeling which guides them in their support activities, and this gut feeling is probably the most valuable resource on which they base their decisions on whether a young person is up for the challenge or not. Being in front of investors, but with a credible business plan and an incubator 'seal of approval' will provide higher chances of success.

The EU|BIC Lazio has gone one-step forward. Giuseppina Maiorano, Senior project manager of the EU|BIC says, “When in 2000, we started our pilot projects for funding young entrepreneurs, we did an evaluation and came to the conclusion that what we were doing was not enough. Furthermore, within the region there were no dedicated financial instruments to support them. We therefore spent time and resources to design and establish a guarantee fund especially dedicated to young entrepreneurs with the participation of local banks. It took over ten months of engineering and negotiations, but we finally succeeded. Of course this is still not enough to satisfy the demand for credit, but the lesson we learnt was that time invested in preparing the right tools for young entrepreneurs is never an over-investment.” In a nutshell, and to quote an oft-stated cliché, the youth are our future. Given global economic climates, internationalised markets, rapidly evolving technologies, and expanding cultures of travel and discovery, it seems that harnessing the entrepreneurial potential of youth is a matter of some importance. Not just to the futures of the young people in question, but to the future of the planet itself. It is clear that incubators play a vital role in ensuring that the young entrepreneurs of today become the business leaders of tomorrow; it is a role that is taking on increasing significance given the challenges we all face. To go back to where we started, it is up to this community of entrepreneurship support providers to make sure that hope lives.